Microsoft overtakes Apple as the world's most valuable company

Apple Inc lost its crown as the world`s most valuable public company to Microsoft Corp on Friday, as the iPhone maker`s shares fell about 2%.

Apple took a $6 billion hit to its sales during the fiscal fourth quarter due to persistent global supply chain problems, leading to a miss on Wall Street expectations. Top boss Tim Cook said the impact will be even worse in the current holiday sales quarter.

"Compared to less hardware-focused FAANG peers, Apple is also a lot more exposed to supply chain disruption," said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

Apple`s shares dropped 1.8% to end the session at $149.80, giving the company a market capitalization of $2.48 trillion. By contrast, shares of Windows software maker Microsoft rose 2.2% to a record high of $331.62, ending the session with a market capitalization of $2.49 trillion.

Apple, which has repurchased $421.7 billion worth of shares over the years, had announced a massive $90 billion share buyback in April. As a result, the outstanding stock pool keeps shrinking, and the company ended its fiscal fourth quarter with 16.4 billion shares.

Microsoft`s stock has surged 49% this year, with pandemic-induced demand for its cloud-based services driving sales. Shares of Apple have climbed 13% so far this year.

Apple`s stock market value overtook Microsoft`s in 2010 as the iPhone made it the world`s premier consumer technology company. The companies have taken turns as Wall Street`s most valuable business in recent years, with Apple holding the title since mid-2020.

Analysts say Apple has managed the supply chain issue well, but with Cook warning of more pressure, the door is open to a hit to its performance as the holiday season kicks in.

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In contrast, Microsoft on Tuesday forecast a strong end to the calendar year. But it also warned that supply-chain woes will continue to dog key units, such as those producing its Surface laptops and Xbox gaming consoles.